Amazon Accused of Inflating Ad Prices in Online Search Auctions

A 23-state coalition, including the Federal Trade Commission (FTC), has filed a lawsuit against Amazon alleging the tech giant deceptively inflated prices for online search advertising auctions.

The plaintiffs claim that for seven years, Amazon added surcharges to the second-place bid in these auctions, driving up the final price paid by winning businesses. This practice is said to have netted Amazon over $20 billion in profits from unsuspecting advertisers.

Amazon uses a system called 'second-price auctions' where bidders compete and are ranked based on their ad bid and relevance to shopper searches. However, the plaintiffs claim that Amazon manipulates this process by adding a surcharge, making it difficult for businesses to understand the true cost of advertising on its platform.

California Attorney General Rob Bonta said at a press conference that Amazon went 'to great lengths to conceal the unlawful scheme' and that if found out, it would 'irrevocably damage advertiser trust.'